Primapel Manufacturing
Case Study #1: Primapel Manufacturing Company, Inc.
Company Background:
Primapel Manufacturing Company, Inc. was a trader and manufacturer of paper products.
October 9, 1996 – PMCI registered with the Securities and Exchange Commission primarily to trade sorted waste paper products, kraft liner board and to manufacture paper products.
Year 1996 – PMCI obtained a BOI-registration to manufacture paper products.
Year 2002 – Production facilities were actually put up.
PMCI was owned and managed by two families: the Lees and the Parks.
Lee Family:
Had been in the business of paper trading since 1950.
Jerry Lee Sr. – the patriarch of the family, was a major stockholder of one of the biggest producers of corrugated boxes in the Philippines.
Park family:
Kevin Park – the patriarch of the family, had extensive worldwide connection in sourcing materials and marketing paper products.
Upon the death of Kevin Park in 2003 and Jerry Lee Sr. in 2004, their children inherited the business and took over the company’s management.
Ryan Park – eldest son of Kevin Park, 48 years old, a CPA with 20 years of experience as trader of paper products, became the new chairman and president.
Jayme Park – 45 years old, became the vice president and director.
Paolo Park – 40 years old, an engineer, became a director.
Jerry Lee Jr. – son of Jerry Lee Sr., 45 years old, a CPA, was appointed as vice chairman and treasurer.
Atlas Machinery Co. – owned about 5 percent of PMCI. It had about 10 years of experience in manufacturing paper making equipment and was responsible for maintaining the machinery and equipment of PMCI.
Statement of the Problem: As the company realized its market share and sales, it seemed to be ever dependent on renewals and increase in credit lines with banks. Management gets the feeling that it was partly due to its history of delays and problems in its start-up.
What is the appropriate capital structure for a start-up company?
Presentation of Facts:
Loan
Company Background:
Primapel Manufacturing Company, Inc. was a trader and manufacturer of paper products.
October 9, 1996 – PMCI registered with the Securities and Exchange Commission primarily to trade sorted waste paper products, kraft liner board and to manufacture paper products.
Year 1996 – PMCI obtained a BOI-registration to manufacture paper products.
Year 2002 – Production facilities were actually put up.
PMCI was owned and managed by two families: the Lees and the Parks.
Lee Family:
Had been in the business of paper trading since 1950.
Jerry Lee Sr. – the patriarch of the family, was a major stockholder of one of the biggest producers of corrugated boxes in the Philippines.
Park family:
Kevin Park – the patriarch of the family, had extensive worldwide connection in sourcing materials and marketing paper products.
Upon the death of Kevin Park in 2003 and Jerry Lee Sr. in 2004, their children inherited the business and took over the company’s management.
Ryan Park – eldest son of Kevin Park, 48 years old, a CPA with 20 years of experience as trader of paper products, became the new chairman and president.
Jayme Park – 45 years old, became the vice president and director.
Paolo Park – 40 years old, an engineer, became a director.
Jerry Lee Jr. – son of Jerry Lee Sr., 45 years old, a CPA, was appointed as vice chairman and treasurer.
Atlas Machinery Co. – owned about 5 percent of PMCI. It had about 10 years of experience in manufacturing paper making equipment and was responsible for maintaining the machinery and equipment of PMCI.
Statement of the Problem: As the company realized its market share and sales, it seemed to be ever dependent on renewals and increase in credit lines with banks. Management gets the feeling that it was partly due to its history of delays and problems in its start-up.
What is the appropriate capital structure for a start-up company?
Presentation of Facts:
Loan